Research Outline

Credit and Debit Card Launch


Provide a competitive analysis of the newest startup debit and credit cards (for example, petal, brex, chime, etc). For each, provide a brief overview, points of differentiation and level of funding. Additionally, provide an analysis of the economics of launching a credit card vs a debit card, and the pros and cons of doing each. Lastly, provide an overview of how credit and debit card companies make money, including the key players that take a cut of funding in each card transaction (issuer, network, acquirer, etc).

Early Findings

Startup Debit and Credit Cards

Debit vs Credit Card Launch Analysis

  • Many startup debit and credit cards partner with existing banks or card companies to back their cards.
  • Fintech startups are interested in debit and credit cards because the traditional banking industry is not serving everyone well. For example, many people without credit history struggle to get a credit card, a problem some fintechs are trying to solve. Many people also run up high overdraft fees in their bank accounts from using debit cards, another problem which some fintechs are tackling.

Business Strategy for Debit and Credit Cards

  • Banks make money from checking accounts by leveraging the deposits and collecting interest on those leveraged deposits.
  • Banks also make money on debit and credit cards by charging merchants fees, as well as, sometimes, charging consumers fees.
  • Banks make money on credit cards through the interest.
  • Credit card issuers, or banks, make money off the interest they charge on credit cards as well as fees, while the networks make their money by charging the merchants fees to process the payments.